Will the Markets Get a Shot of Positivity From Earnings?

The S&P 500 index opens the new quarter with a decline

After setting an all-time closing high last week, the S&P 500 index (NYSEARCA:SPY) fell 0.45 percent to start off the month of April.

The Dow Jones Industrial Average (NYSEARCA:DIA) slid 0.04 percent, the Nasdaq 100 (NYSEARCA:QQQ) dropped 0.87 percent, and the Russell 2000 (NYSEARCA:IWM) was the day’s worst performer with a loss of 1.34 percent.

VIX, the CBOE S&P 500 Volatility Index (NYSEARCA:VXX) and also known as the “fear index,” climbed 6.93 percent to close at 13.58, above its 50-day moving average but still below its long-term average of 20. Monday’s declines were largely triggered by a decline in the U.S. Institute for Supply Management’s index, which fell to 51.3 from last month’s 54.2 and missed expectations of a 54.2 reading.

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This follows last week’s disappointing Chicago PMI, which also declined and missed expectations. Also, the Markit PMI reading for March fell to 54.6 from last month’s 54.9. The one piece of good economic news on Monday was February Construction Spending, which climbed 1.2 percent compared to the previous month’s decline of -2.1 percent.

Tuesday’s economic reports include factory orders and motor vehicle sales…

The S&P 500 still has yet to breach its intraday high of 1576.9, last seen in October 2007. David Stockman made splashy headlines with his forecast of a market crash and his views of crony capitalism and the problems of the financial system. Stocks were also weak in Asia to start the month, with Japan’s Nikkei dropping 2.12 percent.

Apple (NASDAQ:AAPL) dropped 3.11 percent, giving up recent gains and slipping back below its 50-day moving average. For the day, most major sectors finished in the red:

Consumer Discretionary (NYSEARCA:XLY) -0.75 percent

Technology (NYSEARCA:XLK) -0.66 percent

Industrials (NYSEARCA:XLI) -1.22 percent

Materials (NYSEARCA:XLB) -0.87 percent

Energy (NYSEARCA:XLE) -0.20 percent

Financials (NYSEARCA:XLF) -0.49 percent

Utilities (NYSEARCA:XLU) -0.23 percent

Health Care (NYSEARCA:XLV) +0.13 percent

Consumer Staples (NYSEARCA:XLP) -0.05 percent

Bottom line: The S&P 500 continues to face technical and fundamental headwinds after last week’s record high close. Further upward momentum will require positive economic and earnings reports in the upcoming days.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.

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